Orange Juice Squeezes Higher

In a plot reminiscent of the 1983 box office smash Trading Places, a number of spectacular reversals of fortune were seen in the orange juice market this week. Prices jumped 17% on Florida frost concerns and a report that the FDA was testing imports from Brazil for the presence of carbendazim, a fungicide prohibited by the U.S.

Although only approximately one in ten glasses of orange juice consumed in the U.S. comes from Brazil, a restriction on Brazilian imports could significantly disrupt our domestic supplies. On Monday, prices topped out at $2.12 per pound, an all-time high.

In a tremendous about face, prices subsequently dropped 15% as the FDA's review of shipments dragged on. On Friday, prices pressed as much as 11% higher, despite the fact the FDA had not made a definitive ruling about a recall of frozen concentrate from Brazil.

At week's end, prices finished near $1.95 per pound -- an increase of 18 cents.

Bigger Harvest Hamstrings Corn

Corn prices plummeted on Thursday following a USDA report showing that U.S. farmers had been more productive in 2011 than had been expected. The USDA's January report is retrospective, commenting on the size of the corn crop after farmers have completed harvest and the corn is "in the bin". It upwardly revised last fall's corn yield to 147.2 bushels per acre, producing a total of 12.4 billion bushels of corn -- the third-largest crop in U.S. history. After the market had digested the data, prices fell 40 cents per bushel, the daily limit allowed by the Chicago Board of Trade.

Throughout the week, prices were also under pressure due to forecasts projecting increased precipitation over rain-starved regions in Argentina and Brazil, potentially saving their corn and soybean crops from severe drought damage. On the week, corn fell 38 cents per bushel, losing 6% of its value.

Despite this year's sizable harvest, concerns linger that demand could continue to outpace production, keeping supplies low and prices high. Some analysts note that end-users in the corn market, like hog feeders, ethanol producers, and importers like China have recently seen $6 corn as a bargain, supporting prices when they fall beneath that level. As of midday Friday corn for March delivery was trading at $6.04 per bushel.